The Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 15-2025 to highlight the terms and conditions on the taxability of retirement benefits received by employees under a reasonable private retirement plan.
A private retirement plan may avail of the tax incentives once approved by the BIR and has been issued a certificate of tax qualification for tax exemption (“Tax Qualified Plan”). These incentives include (1) exemption from income tax and withholding tax of the retirement benefits and all amounts received by officials and employees of private firms on their retirement benefits; (2) exemption from income tax and withholding tax of the trust income from various investments; and (3) tax deductibility of contributions made by employers.
To avail of the incentives, the qualified employees (1) must have been in the service of the same employer for at least 10 years and is not less than 50 years of age at the time of the retirement; (2) the retiring employee shall not have previously availed of the privilege under a retirement benefit plan of the same or another employer; and (3) the retirement plan must be reasonable as determined by the Commissioner or his authorized representatives.
Employers shall apply for the issuance of a certificate of qualification for tax exemption of the employee retirement benefit plan (“Certificate of Qualification”) within 30 days from the date of effectivity of the retirement benefit plan.Should there be any amendments to the plan, these should also be submitted for certification that the amendment/s do not affect the qualification of the Retirement Plan.
RR 15-2025 takes effect on June 12, 2025, 15 days after its publication on the BIR official website.
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants